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Sri Lanka’s failure to black list defaulting contractors creates global trade issues.

By: Staff Writer

April 10, Colombo (LNW): Sri Lanka is the only country in South Asia that does not recognise engaging in corrupt and fraudulent activities during procurement as a valid reason for blacklisting and it has not blacklisted contractors that have defaulted on contractual obligations despite having the

According to a study by Verité Research, a Colombo-based think tank, the main issue can be attributed to gaps in the procurement guidelines of 2006, which govern almost all public procurement in Sri Lanka — except in a few instances such as pharmaceutical procurement.

“The second issue – not blacklisting defaulting contractors – shows a lack of compliance with existing regulations. Sri Lanka has provisions not only to blacklist defaulting contractors, but also to publish their names in a public, online database.

However, this database, maintained by the Department of Public Finance has failed to update it. The research report disclosed.  

Verité Research indicates that the amount lost on public contracts due to corruption can amount to 10–25 percent of a public contract’s value on average.

The procurement process is fragmented among three layers in the government: departmental, ministerial, and cabinet levels with no mechanisms for ensuring procedural consistency, efficiency, or integrity.

Sri Lanka currently operates a highly decentralised procurement system. The responsibility for executing procurement is vested with secretaries of respective line ministries. Technical and bid evaluation committees are set up per the delegation of authority at the line ministry and Cabinet level.

New public regulatory frame work with clear transparency, accountability, and oversight rules will come into effect this year once the new legislation is passed in parliament to limiting corruption opportunities and mal practices in current public procurement process.

The reports of the Ministry of Finance, the Auditor-General’s Department, and the Department of Management of Audit indicate malpractices have led to inefficiencies and waste of scarce resources of the Government in the context of tight fiscal space.

In this context new Public Procurement Law that reflects international good practices will be enacted this year providing provisions to set up a new regulatory authority

The Procurement Management Information System (PROMISe) is being developed but is currently in a pilot phase.

PROMISe has the potential to be a key tool for improving the integrity of public procurement by enabling better processing, tracking, recording, reporting, and publicising procurement actions and outcomes. Sri Lanka currently lacks a formal legislative basis for procurement and it has contributed to high-levels of political engagement in the selection of procurement winners, poor contract management, limited transparency and a lack of oversight 

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